Clearwater's sales hit hard by COVID-19

Sales plunged by $20 million in the first three months of 2020 at Nova Scotia-based Clearwater Seafoods.

North America's largest shellfish producer reported its first financial results since the COVID-19 pandemic caused the global seafood food service market to collapse.

The company lost $34 million in the first 13 weeks of the year ending April 4 as a result of the virus's impact on restaurant and food service sales in Asia. Sales in its key market in China fell by 46 per cent.

Sales fell to $100 million, down from $120 million during the first quarter last year.

Dividends cut

In a release Friday, the company said it has responded to the pandemic on a number of fronts.

To support liquidity, the company has suspended dividends for the rest of 2020 and increased access to credit.

CEO Ian Smith said in the release the company started the year with great momentum, but by early March "the impact of the global pandemic was being felt in all our markets across the globe with tragic human and challenging economic consequences."

Smith said stringent health safety protocols were implemented in company offices and throughout the fleet.

Non-essential spending cut

"We cut all non-essential spending and capital expenditures to preserve cash for the remainder of the year and successfully secured an amendment to our credit facilities," Smith said in the release.

"We have taken these necessary steps with focus and discipline and are now well-positioned to weather the current economic conditions and take advantage of future growth opportunities as global seafood demand recovers," he said.

In its release, the company said retail and online consumer demand is thriving, while food service customers and their supply chain have been "seriously affected" by physical distancing implemented globally in the first quarter.

Lobster, clam, scallop and langoustines sales were most affected.

Demand will improve

The company said demand is expected to improve as governments begin to relax measures to control the spread of COVID-19.

Speaking to reporters, Smith warned the economic damage worsened in April.

"We are seeing improving demand in the China market, in the Asia market and we expect North America and Europe to follow a similar pattern," he said.

"We are seeing some green shoots, but I don't want to sugar-coat the fact probably the peak impact for us is in the first part of quarter two."

In the release, Clearwater said the company remains up for sale, which was announced in early March.

"The company is moving forward with the formal strategic process to identify, review and evaluate a broad range of potential strategic alternatives," Clearwater said Friday.

Increased spending on safety measures

Treasurer Theresa Fortnay told reporters the dividend cut was not a requirement for the federal subsidies that has kept the company's 1,500-employee Canadian workforce on the payroll.

"It didn't feel right to be paying a dividend at this time," she said.

No one in Clearwater's fleets or offices on three continents has contracted COVID-19.

The company said it spent $1.7 million on safety measures to protect employees. It expects to spend twice that amount between April and the end of June.